Sainsbury’s sales fall amid ‘very competitive’ trading

Sainsbury's chief executive Mike Coupe. Picture: Sainsbury's/PA Wire
Sainsbury's chief executive Mike Coupe. Picture: Sainsbury's/PA Wire
Share this article
1
Have your say

Sainsbury’s today said trading remains “very competitive” and warned over ongoing price pressures from the weak pound as it saw supermarket sales slip back into reverse.

The group posted a 0.5 per cent fall in like-for-like supermarket sales, excluding fuel, in its fourth quarter to 11 March – that follows a rise of 0.1 per cent in the previous three months.

Argos is proving a guardian angel rather than an albatross for Sainsbury’s

John Ibbotson

Overall trading was boosted by a robust performance from its recently acquired Argos chain, which notched up a 4.3 per cent rise in like-for-like sales over the nine weeks.

• READ MORE: Argos delivers the goods for Sainsbury’s

The Argos sales hike helped lift group-wide comparable sales into positive territory, up 0.3 per cent in the fourth quarter.

John Ibbotson, director of consultancy Retail Vision, said: “Argos is proving a guardian angel rather than an albatross for Sainsbury’s. While the acquisition of the catalogue brand initially swallowed time and resources, it is now paying dividends.”

He added that Sainsbury’s “is by no means out of the woods yet, but having a plan that’s different to its competitors – and sticking to it – can count for a lot in the current environment”.

Group chief executive Mike Coupe said he was “pleased” with the company’s performance, but he added: “The market remains very competitive and the impact of cost price pressures remains uncertain.”

200 Voices: find out more about the people who have shaped Scotland

Sainsbury’s blamed its fourth-quarter sales slip on the later Mother’s Day and Easter this year, adding that, after adjusting for this, like-for-like sales would have been 0.1 per cent higher.

It said the timing of Easter and Mother’s Day particularly affected its general merchandise sales, which fell 4 per cent. This offset a 5 per cent rise in sales of its Tu clothing range, while online groceries rose 7 per cent and total convenience store sales were nearly 7 per cent higher.

Martin Lane, managing editor at www.money.co.uk, said: “Sainsbury’s are blaming the fall in sales on the timing of Mother’s Day and Easter, but this could show that we’re all tightening the purse strings.”

The chain’s fourth-quarter sales fall left its annual comparable sales 0.6 per cent lower after what has been an eventful year for the group.

It snapped up catalogue retailer Argos as part of a £1.4 billion takeover of Home Retail Group in 2016 and has since been overhauling its big supermarkets, adding 41 Argos Digital stores within these stores. The group said 11 of these were opened in the fourth quarter alone, while it also now has eight Mini Habitat outlets in its branches.

Coupe said customers were “responding well” to its new Argos ranges, with recent website and app improvements helping online sales grow. Best-sellers over the quarter included mobile phones, video gaming, wearable technology and sports equipment.

But its supermarket business has struggled over the past year amid a lengthy price war in the sector, as well as pressure on costs and shelf prices from the Brexit-hit pound.

The fall in the value of sterling since last year’s EU referendum has seen the cost of imports rocket, with many businesses passing the costs on to consumers.

According to figures from Kantar, food inflation doubled last month to 1.4 per cent year on year as the cost of everyday staples such as butter and tea rose.

More than 500 small foodmakers have responded to a search for Britain’s best local food, just a fortnight after the initiative was launched by supermarket chain Morrisons.

A number of these would-be suppliers showcased their products to buyers from the group, customers and store colleagues as well as the local Women’s Institute at the first selection event in Yorkshire.

Morrisons is hosting ten more events, including one in June at The Fisherrow Community Centre in Musselburgh, in its bid to “unearth a new crop of local growers and food producers”.

Click here to ‘Like’ The Scotsman Business on Facebook